Top 7 areas where Indian startups are (still) attracting funding

Written by: Team Ontropi
Date : 13 Feb 2024

The Indian startup scene has been expanding incredibly quickly. Innovative startups are contributing solutions to both new and old issues that impact how we live and work.

According to Statista, eCommerce startups got around 190 funding deals in 2023 alone, followed by fintech, cleantech, healthtech, and others. Over 1500 investors provided funding of around $10 billion to unique startup ideas. Investors seem to be concentrating on technologically advanced, environmentally friendly resources and solutions.


Still, there has been a significant shift in how investors and markets see Indian startups. India has taken a fancy to startups in recent years; however, several industries, including edtech, have seen significant criticism and loss of funding. This led to a strategic downturn and widespread layoffs, which ultimately made investors wary. Investors are making careful and constrained selections when funding startups, partly due to global economic shifts or ever-dramatic supply chain issues.

We will discuss the top 7 sectors in which Indian startups continue to draw investment from domestic and international investors with the help of this article.


E-mobility and renewable energy

The world is extensively focusing on shifting its reliance on fossil fuels to clean energy. The Indian government is constantly trying to boost the clean energy spectrum too. India is the fourth-largest country in the world for installed renewable energy capacity as of 2022, with 163 GW. The government hopes to take this number up to 500 GW by 2030. It indicates how much scope businesses have if their idea is in line with the future vision the country holds. In this field, there are plenty of opportunities for funding, mergers and acquisitions, and other business ventures.


E-mobility follows the same trajectory as the renewable energy domain. The Indian government is extensively working on improving the electric charging infrastructure. Businesses are also trying to focus on the challenges associated with e-vehicles. All these efforts have made the future of EVs quite bright, and the market for EVs could account for 40% of the total automotive market in the coming few years, making it an attractive segment for investors.


For both of these industries, large amounts of capital and production space are required. However, by focusing on a specific niche market with dedicated products, startups like BluSmart, Ather Energy, Simple Energy, etc., are showing a bright future for future ideas. These segments are undoubtedly set to attract investment.


Sustainability solutions

India is prioritizing sustainable cities and communities, as well as responsible consumption and production. These objectives are wide in scope and call for significant involvement throughout the value chain. Numerous startups are aiming to create solutions in the space like enabling a circular economy and reducing waste.


For instance, organizations like Banyan Nation already assist businesses like Tata Motors, Intel, LOreal, and others in enhancing their recycling ecosystem. Every day, India generates around 26,000 tonnes of plastic waste, of which only 8% is deemed fit for recycling. These numbers are really alarming, and many companies are working on closing the circularity loop. This in turn attracts the attention of investors as there is a great scope of work in this tangent across many end industries like petrochemicals, plastics and materials, food, personal care, etc.


eCommerce and D2C products and services

The rise in digitization has led to eCommerce closing the most deals during funding rounds. As per a report, investors have shown a great deal of interest in Indian startups such as Neeman, which received $9.8 million in Series B funding, Livspace, Licious, Nykaa, Dotpe, Purplle, and many more in the last few years. These businesses either operate eCommerce platforms, have D2C channels, or offer solutions to address certain issues that these eCommerce platforms face.


The Indian eCommerce industry is only going up in the coming years. According to Statista, the number of online consumers will grow to 427 million by 2027. Given how successfully the sector is growing, funding will undoubtedly be drawn to Indian eCommerce and D2C brands.


Artificial intelligence and machine learning

In recent years, artificial intelligence and machine learning solutions have become increasingly popular. They can be applied to various end industries, including logistics, eCommerce, and more. Businesses are using artificial intelligence to help integrate intelligent chatbots; eCommerce platforms are using AI to help bring in facial recognition functionality for virtual tryouts.


Positive investments have been made across sectors in solutions tied to artificial intelligence. For example, Synapse Healthcare secured around $4.2 million in Series-A funding in 2021. Although healthcare or healthtech is a niche market, it is projected to reach $21 billion by 2025. With their chatbot service, Yellow.ai is a different company that has raised $102.2 million to revolutionize eCommerce platforms by giving customers a human-like experience. There are several use cases being explored by innovative startups linked to addressing finance, accounting, compliance, and taxation challenges as well as other cutting-edge applications by leveraging AI. Clearly, a brilliant idea that uses AI to solve a particular issue will draw funding in the upcoming years.


Financial technology and payment services

With the release of apps like Groww and Zerodha that offered simplified solutions to everyday workflows, interest in and understanding of finance took a new turn. The pandemic made it possible for apps like PhonePe to thrive, which are now an essential part of everyones life. Witnessing new players like Jupiter enter the market to provide a smooth online banking experience was another intriguing consideration. In 2021, they raised more than $71 million during their first funding rounds. Because of the digitization of banking, this market is being seen as extremely attractive.


If the offering is distinctive, these two markets will attract investors from around the world in the future, given the global fintech leadership of India.


Logistics and supply chain

Throughout the world, supply chains and logistics suffered greatly during the pandemic. Furthermore, the supply chain and logistics are the first and worst affected areas in the event of any kind of major crisis. Businesses are constantly searching for ways to offer the logistics segment operational efficiency and smooth transactions. Startups are introducing new infrastructure and technology that could elevate this market segment.


In 2021, Trademo, an Indian startup that offers trade data to businesses, secured $12.5 million in a funding round. Since supply chains are the foundation of all businesses, the industry will always be in trend, and investors will be open to considering fresh concepts from startups.


Agritech (Agriculture technology)

Another fascinating market niche that has seen several creative solutions emerge of late is agritech. This industry has the potential to contribute around $600 billion to Indias GDP by the year 2030, with the possibility of increasing the revenue of farmers by 25-55%. Many startups are developing unique solutions to provide better assistance to farmers, like connecting them directly to end consumers. In 2021, Dehaat, a startup working on the same idea, raised $60 million for their ground-breaking concept. Another interesting startup is Bombay Hemp Company, which closed a $5.9 million funding round. Their goal is to reimagine the future of agritech and support the hemp sector in India.


Given that agritech has the potential to boost the GDP of the nation and facilitate a sustainable value chain, which would increase farmer income, investors will undoubtedly be searching for creative startup ideas.


If your proposal falls into any of these categories, you might be one of the most promising candidates for funding. You must, however, be meticulous in outlining your concept and how it will address any underlying issues in these fields. At Ontropi, we can help you secure the funding your idea deserves as well as introduce you to mentors who can strengthen your business with insightful recommendations and help. Get in touch with us to learn more about who we are and how we can help you leverage your efforts to build a great startup.